TaxTMI 
TaxTMI 
2012 (2) TMI 613
X X X X Extracts X X X X
X X X X Extracts X X X X
.... various concerns of Rohit Panwala group. 2) The learned CIT(A) ought to have deleted entire additions on account of purchases from Rohit Panwala group though cross-examination was given only of Rohit Panwala and no other associate concerns." The assessee in the assessment year 2002-03 has raised the following ground of appeal:- ITA No.3590/Ahd/2008 (by assessee) "1) The learned CIT(A) grossly erred in confirming 25% of the alleged non-genuine purchases for Rs. 43,300/- from various concerns of Rohit Panwala group. 2) The learned CIT(A) ought to have deleted entire additions on account of purchases from Rohit Panwala group though cross-examination was given only of Rohit Panwala and no other associate concerns." The assessee in the assessment year 2003-04 has raised the following ground of appeal:- 1) The learned CIT(A) grossly erred in confirming 25% of the alleged non-genuine purchases for Rs. 9,38,650/- from various concerns of Rohit Panwala group. 2) The learned CIT(A) ought to have deleted entire additions on account of purchases from Rohit Panwala group though cross-examination was given only of Rohit Panwala and no ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by the Ld. CIT(A) himself in his appellate order and thereby the decision of the Hon'ble ITAT in the case of M/s Vijay Proteins Ltd., referred to by him, is not applicable to the case of the assessee." The Revenue in assessment year 2003-04 has raised the following grounds of appeal:- ITA No.147/Ahd/2009(by the Revenue) "[1] On the facts and in the circumstances of the case and in law, the learned CIT(A), Surat has erred in restricting the addition made by the A.O of Rs. 84,50,070/-, Rs. 40,300/- and Rs. 9,38,650/- to Rs. 21,12,517/-, Rs. 10,075/- and Rs. 2,34,662/- for Asst. Year 2001-02, 2002-03 and 2003-04 respectively, ignoring the fact that in the case of M/s. Vijay Proteins Ltd., the Hon'ble ITAT has held that the "entire purchase" can be disallowed only if the purchases are "proved to be bogus" and in the case where the so called sellers are not verifiable for which payments were made though through cheques and not proved that the amount of purchases were returned back to the assessee in cash, only 25% being gross profit thereon can be added. [2] The Ld. CIT(A) has not appreciated that in the case of the assessee, it is beyond any doubt prove....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the assessee has failed to maintain complete details of purchases. These constitute a serious defect in the regular accounts maintained by it as certain portion of the purchases was not genuine. In the instant case, the purchase registers is incomplete and incorrect on account of the reason that bogus purchases have been undertaken as evidenced from the confession of entry giver SRP. Hence the purchase registers submitted by the assessee have been found to be incomplete and incorrect and accordingly was rejected u/s.145 of the Act. Thereafter the AO observed that the expenses on fictitious purchases are liable to be disallowed as fictitious expenditures and lacking any business nexus. But the assessee has undertaken dyeing and printing and shown income emanating from this business. Without the consumption and use of colours and chemicals such job work of dyeing and printing can not be undertaken. Since the income arising from job work of dyeing and printing has been shown and offered by the assessee. There must be purchases made in that regard. However, it has been established that the purchases made from concerns of SRP are bogus and no physical delivery has been undertaken. SRP....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bmissions of the appellant and the case laws relied upon. As far as issue of bogus purchases and rejecting the books of account is concerned, I do not agree with the appellant's view. As per the evidences brought on record by the ADIT and the Assessing Officer, Shri Rohit Panwala admitted that he floated various bogus concerns and issued bogus bills to the assessee and after receiving amount by cheque, he returned back the amount in cash. The assessee was also allowed opportunity to cross examination and there was no change in intentions of Shri Rohit Panwala during the examination proceedings, thus, it was established that the claim of the purchases from the bogus concerns of Shri Panwals, are not genuine and rejection of books of account u/s 145 is justified. 6.2 Now the question remains whether the addition has to be made for disallowing entire purchases and whether the addition has to be made u/s.69 for the entire unexplained expenditure, or whether addition for some percentage of bogus purchases has to be made. As observed by the A.O himself, the assessee has undertaken dyeing and printing and shown income therefrom. Without consumption and use of colours and chemical....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessee's case. Further the ratio of the case cited by the assessee of Hon'ble ITAT Ahmedabad Bench in the case of Akruit Dyeing & Printing Mills (P) Ltd. in ITA No.2551/A/2006 & 2752/A/2006, is not applicable to the assessee's case because in that case, the Ho'ble ITAT observed in para-20 that "we find that the revenue has brought no material on record to show that the purchases shown by the assessee from the aforesaid 3 parties, were not genuine and where accommodation/fake bills shown by the assessee. No statement recorded from the aforesaid 3 parties were brought on record. Therefore, the disallowance made is unsustainable and accordingly, we delete the addition made." In these cases, the A.O has brought on record the statement of Shri Rohit Panwala and even the assessee has been given an opportunity9 of cross examination. 6.5 The appellant's submissions that no addition is to be made when there is better G.P rate shown is also not acceptable because here certain purchase have been found as bogus hence, specific addition has to be made for bogus purchases irrespective of G.P rate shown. 6.6 In the result, the addition is restricted to Rs. 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Such evidences produced from both sides ought to have been assessed by the tribunal to decide the factual issues presented before it. By making it abundantly clearly that we are inclined to remit the matter back to the tribunal for full and fresh consideration in accordance with law." 5. The assessee had declared purchases of colours and chemicals from the concern of SRP mentioned hereinabove. SRP had admitted through the affidavit and the statement that he has never sold any raw material or colours and chemicals but has only issued bogus bills at a meager commission price. The amount on receipt of cheque had been withdrawn in cash which has returned to the assessee in cash after deduction of commission. These facts are on record except as argued by the Learned Counsel for the assessee that there is no evidence of money having been received back by the assessee in cash. The assessee had received the goods actually from the suppliers i.e. the concern of SRP, had been argued by the Learned Counsel for the assessee. The assessee has placed on record the paper book which contains the copy of the cross-examination and copy of the bills. On perusal of the same, it has been found tha....